Assessee entitled to full TDS credit in Form 26AS and earlier interest on refund under Sections 199, 244A

HC allowed the writ petition and quashed the impugned order dated 08.04.2024. It held that, where refund becomes due pursuant to appellate or other proceedings, the AO must grant refund and cannot restrict TDS credit to the amount claimed in the original return. The assessee is entitled to full credit of TDS as reflected in Form 26AS, such TDS being treated as tax duly paid under Section 199. Interest on refund is to be computed under Section 244A from 1 April of the relevant assessment year, not from the Tribunal's order date, and the AO must recompute the refund accordingly.

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Issues Involved:
1. Restriction of TDS credit.
2. Taxability of revenue as royalty.
3. Verification and grant of TDS credit.
4. Entitlement to interest on refund.

Detailed Analysis:

1. Restriction of TDS Credit:
The petitioner challenged the order dated 08 April 2024, where the Assessing Officer (AO) restricted the benefit of Tax Deducted at Source (TDS) to INR 24,46,62,305/- as claimed in the Return of Income, resulting in a refund order of INR 4,92,208/- with interest under Section 244A of the Income Tax Act, 1961.

2. Taxability of Revenue as Royalty:
For Assessment Year (AY) 2014-15, the petitioner filed a Return of Income declaring INR 90,35,46,340/- and claimed a refund of INR 3,65,970/-. The Return was selected for scrutiny to determine if revenue earned, including live feed consideration, constituted royalty and was taxable. The AO, in a draft assessment order dated 31 December 2017, held that the consideration for live feed was taxable as royalty. The Dispute Resolution Panel (DRP) affirmed this on 05 September 2018, leading to a final assessment order on 08 October 2018.

The petitioner contested this before the Tribunal, arguing that the consideration for live feed rights was not taxable as royalty and that the respondents failed to grant the full TDS credit as reflected in Form 26AS. The Tribunal, on 21 February 2023, ruled in favor of the petitioner, directing the AO to verify and grant the TDS credit claimed.

3. Verification and Grant of TDS Credit:
The Tribunal directed the AO to verify the TDS credit reflected in Form 26AS, quantified at INR 2,03,36,66,125/-. The petitioner filed an application with the AO, which was disposed of by the impugned order. The respondents, in their counter affidavit, did not dispute the amounts in Form 26AS but argued that since the petitioner did not claim INR 2,03,40,32,090/- in their income tax return, the TDS credit should be denied. They further contended that the petitioner should follow the procedure in Section 239 of the Act for refund claims, which was not done within the prescribed period.

The court found the respondents' position unsustainable, emphasizing Section 240 of the Act, which mandates the AO to refund amounts due from an appeal or other proceedings without requiring a claim from the assessee. The court concluded that the petitioner was entitled to TDS credit as reflected in Form 26AS, along with interest as per Section 244A.

4. Entitlement to Interest on Refund:
The court noted that TDS deposited should be treated as tax paid under Section 199, and interest should accrue from the first day of April of the relevant AY to the refund date per Section 244A (1) (a). The respondents' argument that interest should only accrue from the Tribunal's order date was rejected. The AO's restriction of the petitioner's claim to the Return of Income disclosures was deemed illegal and inequitable.

The court referred to the Supreme Court's decision in Wipro Finance Ltd. v. CIT, which clarified that the Tribunal has plenary powers under Section 254 to admit and grant relief on fresh claims, even if inconsistent with the Return of Income.

Conclusion:
The court allowed the writ petition, quashing the order dated 08 April 2024. It directed the respondents to acknowledge TDS credit as reflected in Form 26AS, amounting to INR 2,27,83,28,430/-, and recompute the refund at INR 2,03,40,32,090/-, considering interest payable under Section 244A (1) (a) of the Act.

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